Taking stock : an update on Vietnam's economic developments and reforms

The pace of Vietnam's economic growth has increased in each of the past three years, and is expected to surpass 8 percent in 2005. This strong performance has been accompanied by a continuation of Vietnam's remarkable success in reducing poverty, which by now has declined to under 20 percent. Even though macroeconomic policymaking has been complicated by supply shocks, external and internal balances have been maintained at manageable levels. Rising international commodity prices while benefiting exports, raised the import bill, and added to inflationary pressures. But these prices have begun to soften towards the end of 2005. In October, Vietnam successfully issued its first international bond on relatively favorable terms. Policy challenges in coming months relate to the quality of credit, and managing the risk of continued inflation.